Ridgecrest Memorial Hospital Lease

5/11/2018 Ridgecrest Memorial Hospital Lease

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PROPERTY MANAGEMENT AGREEMENTTHIS PROPERTY MANAGEMENT AGREEMENT ("Agreement") is made as of this

__ day of November, 2009, between Mayor and City Council of Cumberland, a Marylandmunicipal corporation, (hereinafter referred to as "Owner"), and Ridgecrest Investments, Inc., aMaryland corporation, (hereinafter referred to as "Manager").

WITNESSETH:WHEREAS, Owner owns certain real property and the improvements thereon located at

the site of the Memorial Hospital Campus of Western Maryland Health System, Inc. ("WMHS")in Cumberland, Allegany County, Maryland, said real property being hereinafter referred to asthe "Premises" or "Demised Premises";

WHEREAS, it was originally contemplated by the parties hereto that the arrangementswhich are the subject of this Agreement would take the form of a lease agreement; however, byvirtue of the fact that the Demised Premises would be subject to real estate taxation and the needof the parties to limit the costs of operating and owning the Demised Premises, the parties heretodecided that Manager, rather than being granted a leasehold interest in the Premises, would serveas the property manager for the Demised Premises, procuring subtenants/tenants, negotiatingleases on behalf of Owner and fulfilling the other duties set forth hereinafter;

WHEREAS, it is the intention of the parties hereto that Manager shall become the tenantof the Demised Premises under the terms of this Agreement in the event legislation granting thegoverning body of Allegany County and Owner the authority to grant a property tax creditagainst the county and municipal corporation property tax imposed on the Demised Premises(i.e. legislation similar to that contained in Section 9-302 of the Tax Property Article of theAnnotated Code of Maryland) is enacted and becomes effective and the governing body ofAllegany County and Owner grant such tax credits, which enactment, effectiveness and grantingof tax credits are hereinafter collectively referred to as the "Tax Law Contingencies";

WHEREAS, until such time as the Tax Law Contingencies are met and Owner provideswritten notification thereof to Manager, Manager will be managing the Premises for the primarypurpose of leasing portions thereof to subtenants/tenants so that Owner and Manager can share inthe rents derived therefrom in the manner set forth hereinafter;WHEREAS, it is understood and agreed that Manager shall be obligated to use its bestefforts to procure subtenants/tenants who will occupy the Premises and that most, if not all of thePremises, will be occupied by subtenants/tenants procured by Manager in the event Manager's

efforts are successful, it being further understood that the generation of rents sufficient to payOwner's Operating Costs, as that term is hereinafter defined, and the production of revenues forthe benefit of Owner and Manager will be directly related to the percentage of net rentable spaceoccupied by subtenants/tenants and the rents paid by them;WHEREAS, the Premises is currently occupied by WMHS pursuant to the terms of acertain Lease Agreement between Owner and The Memorial Hospital and Medical Center of

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Cumberland, Inc. (WMHS's predecessor-in-interest) and the Board of Governors of theMemorial Hospital of Cumberland, Inc. dated May 14, 1982 and recorded among the LandRecords of Allegany County, Maryland in Deeds Liber 529, folio 342, as amended by thefollowing documents:

A. An Addendum to Lease Agreement between the same parties dated May14,1982;B. An Addendum to Lease Agreement between the same parties dated May30, 1995; andC. A Lease Amendment and Extension Agreement dated February 15,2000 between City and WMHS, which Lease Agreement, Addenda toLease Agreement and Lease Amendment and Extension Agreement arehereinafter collectively referred to as the "WMHS Lease");

WHEREAS, WMHS and Owner agreed to terminate the WMHS Lease pursuant to theterms of the Agreement between Owner and WMHS dated April 15, 2008 (the "WMHS LeaseTermination Agreement"), a copy of which is attached hereto and incorporated by referenceherein as Exhibit 1, pursuant to the terms and conditions thereof, including, but not limited to,terms setting forth time frames for WMHS's vacation of the Premises, leaseback obligations, andrestrictive covenants regarding the use of the Premises; andWHEREAS, subject to the terms of the WMHS Lease Termination Agreement, Managerdesires to manage said Premises and Owner desires that Manager manage the Premises subject tothe terms set forth hereinafter.

NOW, THEREFORE, in consideration of the rents, covenants and agreements hereincontained, Manager hereby agrees to provide services of property manager for the Premises andOwner hereby agrees that Manager shall fulfill those responsibilities, all subject to the followingterms and conditions:

ARTICLE 1Recitals/Premises Management1.01 Recitals. The recitals set forth above are not merely prefatory. They areincorporated by reference herein and form a part of this Agreement as though they were set forth

in full herein.1.02 Management. Manager shall manage the Premises, procuring subtenants/tenantsfor the benefit of Owner, marketing the Premises to potential subtenants/tenants, negotiatingleases on behalf of Owner, improving the Premises in order to suit the needs ofSubtenants/tenants and performing such other duties as are set forth hereinafter. Itis understoodthat Manager's obligations and the leases negotiated by Manager on Owner's behalf shall besubject to the terms of the WMHS Lease Termination Agreement.

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ARTICLE 2Term2.01 Tenn. The initial term of this Agreement ("Initial Term") shall commence as of

the date of its execution as first written above and it shall terminate April 30, 2020.2.02 Renewal Terms. Unless Manager gives Owner written notice at least ninety (90)days prior to the end of the Initial Term that it does not wish to continue the Agreement, this

Agreement will automatically renew on the same terms, covenants, and conditions applicable tothe Initial Term for a term often additional (10) years (the "Renewal Term").2.03 Elective Termination, Should Owner become dissatisfied with Manager's

performance under the terms of this Agreement prior to Manager's exercise of the PurchaseOption provided for in Article 18 hereinafter, it may terminate this Agreement "for cause" byproviding Manager with ninety (90) days advance written notice of said early termination and itsreason(s) for such termination. Upon such early termination of this Agreement, Owner shall beobligated to reimburse Manager for the cost of all tenant improvements to the Premises thatManager made at Manager's expense. Manager shall be required to attain tenant occupancy ofno less than ten percent (10%) of the Net Rentable Space by the one (1) year anniversary of thisAgreement and to increase such occupancy by ten percent (10%) each year thereafter. Thisstandard sets forth Manager's minimum performance requirements under the terms of thisAgreement. In the event Manager is not able to meet these performance requirements, Ownermay elect to terminate this Agreement.

ARTICLE 3Rent, Additional Charges and Security

3.01 Payment of Rent. Manager shall be responsible for the collection of rent fromsubtenants/tenants. The Minimum Rent, Additional Rent and any additional charges hereunder(collectively, hereinafter referred to as the "Rent") shall be due and payable monthly in arrears at57 N. Liberty Street, Cumberland, MD 21502, ATTN: Comptroller, or such other place asOwner shall, from time to time in writing designate, on the first day of each month during theterm of this Agreement (except as otherwise specifically provided in this Agreement). The Rentshall be paid to Owner without notice or demand and without abatement, deduction, recoupment,counterclaim or setoff (except as otherwise specifically provided in this Agreement). The use ofthe terms Minimum Rent, Additional Rent and Rent are for convenience only and are notintended to transform this Agreement into a lease agreement. This Agreement shall become alease agreement upon the satisfaction of the Tax Law Contingencies, the same being deemed tobe satisfied upon Owner's written notification to Manager that they have been satisfied.

3.02 Minimum Rent. The minimum rent payable by Manager to Owner under theterms of this Agreement ("Minimum Rent") shall be fifty percent (50%) of all net rental incomepaid to Manager by its subtenants/tenants ("Net Rental Income"). The Net Rental Income shallbe the gross rent payable by Manager's subtenants/tenants under the terms of each sublease/leaseless the sums of money Manager has paid to improve the portion of the Premises occupied byeach subtenant/tenant ("Manager's Costs"). Notwithstanding the foregoing, with respect to each

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subtenant/tenant, the Minimum Rent shall be no less than one hundred twenty percent (120%)of the Owner's Prorated Costs. By way of example, if the Net Rental Income due from asubtenant/tenant of Manager is $6.00 per square foot per year for a subleased/leased portion ofthe Premises and Owner's Prorated Costs are $3.25 per square foot per year, the Minimum Rentfor that subleased/leased portion of the Premises would be $3.90 ($3.25 x 120%) per square footper year because 50% of the Net Rental Income would be less than 120% of Owner's ProratedCosts. Installments of Minimum Rent shall be paid monthly in arrears on the first day of eachmonth following the date of this Agreement.

3.03 Owner's Prorated Costs. Itis agreed that Owner's Prorated Costs as of the date ofthe execution of this Agreement are $5.00 per square foot per year. Thereafter, said Owner'sProrated Costs shall be determined by adding the costs of insuring the Premises, providingutilities for the Premises, maintaining the Premises, any other costs that are incurred by Owneras required by the terms of this Agreement and the real estates taxes for the Premises anddividing the sum total by the net rentable space in the Premises ("Net Rentable Space").

3.03.01 Net Rentable Space. The gross floor space of the buildings on thePremises (the "Buildings") has been estimated to be approximately 340,000 square feet. Withinninety (90) days of the date of this Agreement, the parties will measure the floor space in theBuildings for the purposes of determining the net rentable space and they will negotiate in goodfaith to determine that figure. The parties' agreement regarding the net rentable space shall beset forth in a writing signed by the said parties.

3.03.02 Changes in Owner's Prorated Costs. Owner and Manager agree that inthe event there is a change of five percent (5%) or more in Owner's Prorated Costs during theInitial Term or the Renewal Term, Owner's Prorated Costs for the purpose of determining theMinimum Rent shall be adjusted accordingly. Prior to such an adjustment, Owner must provideManager with written notice of its request for an adjustment, said notification to include anexplanation regarding the basis as well as any applicable documentation supporting the request.Manager may not unreasonably deny Owner's request for and adjustment in Owner's ProratedCosts. The said adjustment shall take effect immediately.

3.03.03 Real Estate Taxes. For purposes of calculating Owner's Prorated Costs,it is stipulated and agreed that the portion of Owner's Prorated Costs attributable to real estatetaxes shall be $1.35 per square foot of Net Rentable Space. In the event the assessment for thePremises is such that the real estate taxes are more than $1.35 per square foot of Net RentableSpace, the parties shall negotiate for an increase in the Owner's Prorated Costs, but Owner shallbe entitled to an increase which fully accounts for the increase in the real property taxes.

3.04 Manager's Costs. In the event a portion of the Premises needs to be improved tosuit the needs of a particular subtenant/tenant, Manager's Costs shall be determined pursuant tothe following protocols.

3.04.01 Documentation Available. Manager shall be responsible for collectingall invoices from contractors and subcontractors for the performance of the work required toimprove the Premises, segregating them as to each subtenant/tenant. Those documents shall be

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submitted to Owner as soon as is practicable after the improvement work for the benefit of eachsubtenant/tenant is completed. Those costs shall be subject to the approval of Owner, saidapproval not to be unreasonably withheld, and they shall be deemed to be the Manager's Costsfor the applicable space in the Premises for the purposes of this Agreement.3.04.02 No Documentation Available. In the event Manager has not or cannotprovide the documentation set forth in Section 3.04.01 and a sublease/lease includes provisionsprorating a portion ofthe rent to the cost of improving the applicable portion of the Premises, theManager's Costs as to that portion of the Premises shall be deemed to be the prorated portion ofthe rent payable for the improvement costs discounted by twenty percent (20%). In the eventManager has not or cannot provide the documentation set forth in Section 3.04.01 and thesublease/lease does not include the aforesaid provisions relative to improvement costs, Ownerand Manager shall negotiate in good faith in order to make a determination as to what theManager's Costs are for the applicable portion of the Premises and their agreement regarding thematter shall be reduced to writing.

3.05 Amortization of Manager's Costs. Manager may use its discretion in determiningthe extent to which each subtenant's/tenant's space shall be improved and the cost incurred inmaking the said improvements. Manager's Costs, as to each subtenant/tenant, shall be amortizedover the initial term of the subtenant' s/tenant' s lease for the purpose of calculating MinimumRent.

3.06 Minimum Rent for Outparcels. It is conceivable that a prospectivesubtenant/tenant may desire to construct a structure on the portion of the Premises which iscurrently unimproved, i.e., the parking lot. In such event, the Minimum Rent payable to Ownerfor such a sublease/lease shall be negotiated between Owner and Manager subject to the provisothat the Minimum Rent therefore shall be no less than fifty percent (50%) of the basic rentpayable to Manager under the terms of the sublease/lease.

3.07 Late Charge. In the event the Rent shall not be received by Owner within fifteendays (15) days of its due date, a late charge of five (5%) percent of the Rent then due shall beadded thereto as a late charge. In the event any Rent remains unpaid for thirty (30) days, interestshall accrue on such unpaid Rent from the date when due until payment at the rate of one andone-half percent (1 1/2%) per month, or, if less, the highest rate permitted by law. The latecharge and interest imposed under this Section is not a penalty and has been agreed to by Ownerand Manager as necessary to compensate Owner for its additional costs associated with latepayment.

ARTICLE 4Owner's Security Interest

4.01 Grant of Security Interest. To secure the payment of all Rent and any othercharges due and to become due hereunder and the faithful performance of this Agreement byManager, Manager hereby grants to Owner an express first and prior contract lien and securityinterest on all subleases/leases, licenses and concessions of, to and for the Demised Premises orany portion thereof granted by Manager to subtenants/tenants, licensees or concessionaires, and

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also upon all proceeds of any insurance that may accrue to Manager by reason of destruction ofor damage to the Demised Premises, all of which is collectively hereinafter referred to as the"Collateral". All exemption laws are hereby waived in favor of said lien and security interest. Inthe event of a breach of this Agreement, this lien may be foreclosed with or without courtproceedings by public or private sale, provided Owner gives Manager at least ten (10) days'notice of the time and place of said sale, which Manager agrees to be commercially reasonable,and Owner shall have the right to become the purchaser, upon being the highest bidder at suchsale. Owner shall, in addition to all of its rights hereunder, also have any of the rights andremedies of a secured party under the Maryland Uniform Commercial Code.

4.02 Authorization to File UCC-I. Manager hereby authorizes Owner to file such fi-nancing statements andlor other instruments with the State of Maryland or among the LandRecords of Allegany County, Maryland as are necessary to perfect andlor continue the perfectionof Owner's security interest in the Collateral. Manager shall execute such instruments uponpresentation in the event Manager's execution thereof is required in order to file the same.

4.03 Prohibition against Encumbrances. Manager covenants and agrees that, withoutthe prior written consent of Owner, it will not (a) sell, assign or transfer any of its rights orinterests in the Collateral or any part thereof; or (b) create any security interest in, mortgage orotherwise encumber the Collateral, or any part thereof, or permit the same to be or becomesubject to any lien, attachment, execution, sequestration, other legal or equitable process, or anyencumbrance of any kind or character, except Owner's security interest herein created. Theprohibition against transfer contained herein includes the transfer of a controlling interest inManager.

ARTICLESUse of Premises5.01 Zoning. On or before June 30, 2010, the Premises will be a part of a floating

zoning district which will permit a wide variety of commercial, retail and residential uses of thePremises. Manager shall be responsible for applying for a change in the zoning for the Premises,to the extent required to satisfy Manager that the Premises is zoned in the manner it desires, nolater than January 30, 2010. In the event the application for a zoning amendment is denied,Manager shall have the option of terminating this Agreement no later than thirty (30) days afterthe said denial. Should Manager fail to take the actions required in the manner set forth in thisSection 5.01 of this Agreement, it shall be deemed to have waived its rights hereunder. Nothingcontained in this Section 5.01 shall be deemed to constitute a commitment on the part of Ownerto consent to the zoning amendment Manager may request hereunder, it being understood thatOwner's decision shall be based upon the application of relevant law.

5.02 Public Regulations. In the use of the Demised Premises and the conduct of itsbusiness in or about the Demised Premises, Manager shall at all times observe and comply withall applicable laws, ordinances and regulations of public authorities. It shall also be responsiblefor ensuring that all subtenants' /tenants' use of the Premises is compliant with all applicablelaws, ordinances and regulations of public authorities.

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ARTICLE 6Trade Fixtures6.01 Trade Fixtures. Subsequent to Manager's occupancy, Manager will make and/or

fix all interior repairs, replacements, fixtures and decorations that it Of its subtenants/tenantshave made to the Demised Premises at its own expense and to the extent any such repairs,replacements, decorations and/or any fixtures shall become affixed to the Demised Premises orshall be attached to the face of any wall or partition (interior or exterior) in the DemisedPremises, such repairs, replacements, decorations and/or fixtures shall become the property ofOwner; provided, however, Owner may at its option require Manager to remove all or any partof such repair, replacement, decoration and/or fixtures at Manager's expense and may further, atManager's expense, require Manager to restore the Demised Premises to their original conditionupon any such removal, normal wear and tear excepted. If Owner exercises its option herein forthe removal or restoration, it shall do so by written notice sent to Manager at least thirty (30)days prior to the end of the term of this Agreement, or within thirty (30) days after thetermination of this Agreement if termination is prior to the end of the term of this Agreement.Manager will permit Owner, or its agents, to enter the Demised Premises at all reasonable timesduring the term of this Agreement for the purpose of inspecting same.

ARTICLE 7Insurance7.01 Insurance Companies. All policies of insurance to be kept and maintained inforce by the respective parties hereto shall be obtained from insurance companies with a ratingof B++ or greater and financial size category of Class VIII both as rated in the most recentedition of Best's Key Rating Guide.

7.02 Manager Liability Insurance. During the term of this Agreement, Manager shallprovide and maintain at its cost and expense a policy or policies of commercial general liabilityinsurance with respect to its occupancy and use of the Demised Premises and the businessoperated by Manager and any subtenants, concessionaires, or licensees of Manager in theDemised Premises with minimum combined single limits of One Million Dollars per occurrenceand Three Million Dollars in the aggregate. Such policy or policies shall be in form acceptableto Owner, endorsed to include Owner as an additional insured, contain cross-liability andseverability of interest endorsements, state that this insurance is primary insurance as regardsany other insurance carried by Owner, and shall include the following coverages: (1)Premises/operations; (2) independent contractors; (3) broad form contractual liability specificallyin support of, but not limited to, the indemnity sections of this Agreement; (4) broad formproperty damage. Furthermore, Manager shall provide and maintain at its cost and expense anumbrella excess liability insurance policy with minimum combined single limits of Five MillionDollars per occurrence and in the aggregate, which policy shall be written on a form followingumbrella excess basis above the coverages described in this Section, and shall be endorsed toinclude Owner as an additional insured. Manager shall furnish Owner with copies of the policesand certificates of insurance before any entry of Manager or agents, servants, or invitees uponthe Demised Premises. Thereafter, Manager shall annually deliver certificates of renewal ofeach insurance not less than 30 days in advance of the expiration date of the policy; bearing

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verification from the agent of the company issuing the certificate that the premiums thereforehave been paid in full. Each policy shall provide that it shall not be subject to cancellation,material change, or non-renewal without 30 days prior written notice to Owner.

7.03 Manager's Fire Insurance on Improvements. Manager shall be solely responsibleto maintain and keep in force any and all policies on leasehold improvements over and above thestandard fixtures at the Demised Premises and on Manager's alterations, equipment and personalproperty in the Demised Premises.7.04 Manager's Waiver of Casualty Insurance Proceeds. In the event the DemisedPremises shall be damaged or destroyed by fire, or other casualty so insured against, Managershall claim no interest in any insurance settlement arising out of any such loss where premiumsare paid by Owner, or where Owner is named as the sole beneficiary, and Manager shall executeany and all documents required by Owner or the insurance company or companies that may benecessary for use in connection with settlement of any such loss.

ARTICLE 8Covenant of Quiet Enjoyment8.01 Ouiet Enjoyment. Upon the satisfaction of the Tax Law Contingencies andOwners written notification thereof to Manager, Manager, upon paying the Rent and othercharges herein provided for, and performing all the other terms of this Agreement, shall quietlyhave and enjoy the Demised Premises during the term of this Agreement without hindrance ormolestation of anyone claiming by or through Owner, subject, however, to the reservations andconditions of this Agreement and by any mortgage to which this Agreement is subordinate.Notwithstanding the foregoing, Owner shall have the right to enter in and upon the Premises forthe purposes stated elsewhere in this Agreement and the covenant of quiet enjoyment contained

herein shall be subject to the rights and obligations of Owner as set forth elsewhere in thisAgreement.ARTICLE 9Assignment and Sublease/Lease

9.01 Manager's Marketing Obligations. It is understood and agreed that the principalpurpose of this Agreement is for Manager to sublet/lease space in the Demised Premises tosubtenants/tenants. In that regard, Manager shall be responsible for marketing the Premises infurtherance of that purpose, paying all costs therefor.9.02 Limitation on Assignment. Manager shall not assign, mortgage, or encumber thisAgreement nor sublet nor permit the Demised Premises or any part thereof to be used by others,without the prior written consent of Owner in each instance. Notwithstanding the foregoing it isunderstood and agreed by Owner and Manager that Manager must utilize its best efforts toprocure subtenants/tenants for the Premises in order to generate revenues for the benefit of bothOwner and Manager. In that regard, Owner may not unreasonably withhold its consent to anysublease/lease of the Premises, in whole or in part. Further, Owner agrees that Manager mayassign this Agreement to a company that is wholly owned by either Manager or John Laughlin,

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the sole stockholder and owner of Manager; provided, however, that such assignment, illaccord with Section 9.03 hereof, does not relieve Manager of any of its obligations herein.

9.03 Continued Liability of Manager. In the event that Manager obtains Owner'swritten consent and sublets, assigns, mortgages or encumbers this Agreement, Manager agrees toremain primarily liable to Owner for the performance of its obligation under the terms of thisAgreement, unless such liability is expressly waived in writing by Owner.

9.04 Transfer of Control of Manager. For the purpose of this Agreement, any sale ortransfer of a majority or controlling interest of the stock of a corporate Manager, a majority orcontrolling interest of the partnership if limited partnership or a general partnership Manager, amajority or controlling interest in any limited liability company, or any similar sale or transfer ofcontrol of a business entity shall be deemed to be an assignment of this Agreement requiringOwner's prior written consent.9.05 Required Sublease/lease Provisions. All subleases/leases for the Premises shall

include the following provisions:A. Each sublease/lease shall provide that the uses permitted thereunder are subjectto the terms of the restrictive covenants set forth in the WMHS Termination

Agreement.B. Subtenants/tenants must agree to comply with the terms of this Agreement andagree not do or permit to be done anything that, if done or permitted by Man-ager, would constitute a breach or default of Manager's obligations hereunder.C. Subtenants/tenants must agree to indemnify Owner and Manager, jointly and

severally, for all damages incurred as a result of breaches of sublease/leaseterms.D. Subtenants/tenants must agree to waive the right to assert liability againstOwner in the same manner as Manager under Section 15.02 of this Agreement.E. Each sublease/lease must include a provision to the effect that its terms are sub-ject and subordinate to the terms of this Agreement and that, in the event of aconflict between the terms of the sublease/lease and this Agreement, the termsof this Agreement shall control.F. Each sublease/lease must include provisions granting Owner the inspection and

signage rights described in Section 21 hereinafter.Notwithstanding the foregoing, all subleases/leases shall be subject to the approval of Owner,said approval not to be unreasonably withheld, and Manager shall not enter into any sub-leases/leases without first obtaining Owner's written consent therefor.

9.06 Copies of Subleases/leases. Manager shall provide Owner with copies of all

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executed subleases/leases, said copies to be provided as soon as practicable after theirexecution.9.07 Satisfaction of Tax Law Contingencies. Upon satisfaction of all of the Tax Law

Contingencies and Owner's written notification to Manager that they have been satisfied, Ownershall assign all leases for the Premises to Manager. At that time, Manager shall become Owner'stenant hereunder and the lease tenants shall become subtenants hereunder. None of the parties'respective obligations hereunder shall be altered except that Manager's obligations shall relate tosubtenants of Owner, which subtenants will be Manager's tenants.ARTICLE 10

Alterations, Changes and Additions10.01 Limitation on Manager Alterations. Manager shall make no "material alterations",decorations, installations, additions, or improvements in or to the Building or Demised Premiseswithout first obtaining Owner's prior written consent, said consent not to be unreasonably

withheld, it being understood that the Premises will need to be improved in order to meet theneeds of the subtenants/tenants who are expected to sublease/lease the Premises. All permittedwork, alterations, additions, or improvements shall be at Manager's sole expense and shall bedone in the manner and at such times as Owner shall direct. All alterations, decorations,additions, installations, or improvements made by either Manager or Owner shall at Owner'soption become the property of Owner and shall at Agreement termination be retained or removedat Owner's discretion, all as provided in Article 6, hereof. For the purposes of this section,"material alterations" shall be those that cost, in the aggregate, more than $5,000.ARTICLE 11

Repair and Maintenance11.01 Owner's Responsibilities. Owner shall be responsible for the repair andmaintenance of the walls, roofs, foundations and operating and mechanical systems of theBuildings. Itwill also be responsible for the maintenance of the grounds and landscaping of andon the Premises as well as snow removal.11.02. Operating Cost Reduction. Owner and Manager will cooperate with one anotherfor purposes of reducing the respective operating costs for the Premises each of them areobligated to pay under the terms of this Agreement by selectively mothballing unused portions ofthe Buildings, sharing tenant, vendor and market information, and cooperatively andcompetitively marketing space in the Premises.

ARTICLE 12Casualty Repair and Maintenance

12.01 Casualty. If the Demised Premises is damaged by fire or other casualty but is notthereby rendered untenantable in whole or in part, Owner, at its own expense, subject to thelimitations set forth in this Agreement, shall cause such damage to be repaired, and the Rent andthe subtenants' /tenants' rents shall not be abated. If by reason of any damage or destruction to

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the Demised Premises, the Demised Premises shall be rendered untenantable in whole or inpart, (1) Owner at its option, at its own expense, may cause the damage to be repaired withreasonable dispatch, and the rent described previously in this paragraph shall be abatedproportionately as to the portion of the Demised Premises rendered untenantable while it isuntenantable, or (2) Owner shall have the right, to be exercised by notice in writing delivered toManager within thirty days from and after the occurrence of such damage or destruction, toterminate this Agreement, and the rent previously described in this paragraph shall be adjusted asof the date of such termination. In no event shall Owner be obligated to expend for any repairsor reconstruction pursuant to this section an amount in excess of the insurance proceeds, if any,recovered by it and allocable to the damage to the Demised Premises after deducting therefromOwner's reasonable expenses and obtaining such proceeds and any amount required to be paid toOwner's mortgagee. In determining what constitutes reasonable dispatch, consideration shall begiven to delays caused by strike, adjustments of insurance and other causes beyond Owner'scontrol.

ARTICLE 13Surrender in the Same Good Order and Condition

13.01 Surrender. At the termination of the Agreement, Manager shall vacate theDemised Premises in the good order and repair in which such property now is, ordinary wear andtear excepted, and remove all property which its owns and is permitted to remove from theDemised Premises under the provisions of this Agreement, and failing to do so, Owner at itsoption may either (1) cause that property to be removed at the risk and expense of Manager (bothas to loss and damage), and Manager hereby agrees to pay all reasonable costs and expensesincurred thereby, including sums paid to store the property elsewhere, and the costs of anyrepairs to the Demised Premises caused by the removal of the property; (2) upon thirty dayswritten notice to Manager, which the parties agree is commercially reasonable, sell at public orprivate sale and or all of such property, whether exempt or not from sale under execution orattachment (such property being deemed charged with a lien in favor of Owner for all sums duehereunder, with the proceeds to be applied as set forth herein); or (3) at Owner's option, titleshall pass to Owner. Owner shall also have the same rights to enforce this covenant byejectment and for damages or otherwise as for the breach of any other condition or covenant ofthis Agreement.

13.02 Facility Chemical Clean-up. Upon Manager's vacating the Premises, Manageragrees to remove all of its chemicals used or stored on or around the Premises. Manager furtheragrees to clean up any and all chemical spills on the Premises, such that a Phase I EnvironmentalAssessment will not take exception to the environmental condition ofthe Premises with regard toany chemicals used by Manager or spilled by Manager during its occupancy.ARTICLE 14

Indemnification ofOwner14.01 Manager's Notice of Work to be Performed. Manager shall serve a written noticeon Owner at least five (5) days prior to permitting any work involving repairs, improvements,construction, and the like to be commenced in or on the Demised Premises. Owner agrees to

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review Manager's request to make such improvement within five (5) business days ofsubmission and either to consent to such improvements being made or to suggest a reasonablealternative course of action to accomplish the work set forth in Manager's request. Owner'sfailure to prohibit the improvements being made in such five (5) day period shall be construed aspermission for Manager to proceed to make the requested improvements.

14.02 Liens and Encumbrances. Manager shall indemnify Owner and the DemisedPremises and all improvements placed thereon against all claims, liens, claims of lien, demands,charges, encumbrances, or litigation arising directly or indirectly out of or by reason of any workor activity of Manager on the Demised Premises, and shall forthwith and within fifteen (15) daysafter the filing of any lien for record fully pay and satisfy the same, and shall reimburse Ownerfor all loss, damage, and expense, including reasonable attorney's fees, which it may suffer or beput to by reason of any such claims of lien, demands, charges, encumbrances, or litigation. Theprovisions of this Article shall survive termination or earlier expiration of this Agreement. In theevent Manager shall fail to pay and fully discharge any claim, lien, claims of lien, demand,charge, encumbrances, or litigation, or should proceedings be instituted for the foreclosure ofany lien or encumbrance, Owner shall have the right, at its option, at any time after theexpiration of such fifteen (15) day period, to pay the same or any portion thereof, with or withoutthe costs and expenses claimed by such claimant, and in making such payment Owner shall bethe sole judge of the legality thereof. All amounts so paid by Owner shall be repaid by Managerto Owner on demand, together with interest thereon at the rate of twelve (12%) percent perannum from the date of payment by Owner until repayment is fully made.

14.03 Personal Injuries; Violations of Law. Manager will defend, indemnify and saveOwner harmless from and against any and all claims, actions, damages, liability and expenses(including but not limited to reasonable attorneys' fees) in connection with the loss oflife, bodilyinjury, or damage to property or business arising from, related to, or in connection with theoccupancy or use by Manager or any assignee, subtenant, concessionaire, or licensee of theDemised Premises, or any part of Owner's personal property or the Buildings or occasionedwholly or in part by any act or omission of Manager or any assignee, subtenant, concessionaire,or licensee or its or their contractors, subcontractors, or its or theirs agents, or employees or otherpersons on the Demised Premises. Manager shall indemnify Owner against any penalty,damage, or charge incurred or imposed by reason of any violation of law or ordinance byManager, or any person or persons holding under Manager, guests, customers and inviteesagainst any costs, damage, or expense arising out of the death of or injury to any person orpersons holding under Manager, guests, customers and invitees. Owner will indemnify Manageronly for damages occasioned wholly by direct and sole negligence of Owner or any person orentity acting on Owner's behalf. Manager shall also pay all expenses, costs, and reasonableattorneys' fees that may be expended or incurred by Owner in enforcing the covenants andagreements of this Agreement unless Manager prevails in court. The provisions of this Articleshall survive termination or earlier expiration of this Agreement.

ARTICLE 15Defects, Defective Condition, Wind, Acts of Third Persons15.01 Owner's Liability. Owner shall not be liable to Manager for any damage or injury

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to Manager or Manager's property occasioned by any defect of plumbing, heating, air cooling,air conditioning equipment and ducts, electrical wiring or insulation thereof, gas pipes or steampipes, or from broken steps, or from the backing-up of any sewer pipe, or from the bursting,leaking or running of any tank, tub, washstand, toilet or waste pipe, drain, or any other pipe ortank in, on or about the Demised Premises, or from the escape of steam or hot water from anyboiler and radiator, or for any such damage or injury occasioned by water being on or comingthrough the roof, stairs, walks, or any other place on or near the Demised Premises unless Ownerneglects or fails to repair same promptly after receipt of written notice thereof from Manager or asubtenant/tenant of Manager, or for any such damage or injury done or occasioned by the fallingof any fixture, plaster or stucco, or for any damage or injury caused by wind or by the act,omission or negligence of other persons, occupants of the same building or of adjacent buildingsor contiguous property.

15.02 Waiver of Claims Against Owner. All claims against Owner for any damage orinjury as provided in Section 15.01 of this Article, are hereby waived by Manager as and to theextent provided in Section 15.01 only, except those claims occasioned by Owner's neglect orfailure to promptly make repairs for which Owner is responsible under this Agreement, after duewritten notice thereof by Manager.

15.03 Subrogation. Notwithstanding anything to the contrary contained in thisAgreement, Owner and Manager do mutually each release and discharge the other, and allpersons against whom their insurance company or companies would have a right or claim byvirtue of subrogation of and from all suits, claims and demands whatsoever for loss or damage tothe property of the other, even if caused by or occurring through or as the result of a negligentact or omission of the party released hereby or its contractors, subcontractors, agents, oremployees, so long as and to the extent that such loss or damage is covered by insurancebenefiting the party suffering such loss or damage, or if the party suffering such loss or damagewas required by this Agreement to be carrying insurance covering same. Each party furtheragrees that it will use reasonable efforts to cause its policies of insurance for covered perilsapplicable to damage to property to be so written as to include a waiver of subrogation bycausing such policies to contain a clause in substantially the following form: It is herebystipulated that this insurance shall not be invalidated should the insured or any of them waive inwriting prior to a loss any or all right of recovery against any person or entity for loss occurringto the property described herein. If the inclusion of such a clause occasions additional costs forthe policyholder, the other party shall be given notice of such additional costs and theopportunity to pay it within thirty days, in which case the policyholder shall require theinsurance company to include the clause.

ARTICLE 16Eminent Domain16.01 Amount of Taking. If thirty-five (35%) percent or more of the area of theDemised Premises as a whole is taken by condemnation or under power of eminent domain,either party may elect to terminate this Agreement. In the event of such termination, the partieshereto shall be released from any and all further liability under this Agreement. In the event theAgreement is not so terminated, Owner shall make such repairs and alterations to the extent of

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condemnation proceeds available for such purpose to the part of the Demised Premises not sotaken as may be necessary to restore it as nearly as practicable to its condition immediately priorto the taking, taking into account the fact of such taking, and from the date of such taking theRent shall be reduced proportionately as to the portion of the Demised Premises so taken.

16.02 Right to Condemnation Award. Any award made in any condemnationproceeding for the taking of any part of all of the Demised Premises shall be the sole property ofand be paid to Owner, and Manager shall have no claim against Owner or the condemningauthority for the value of any unexpired term of this Agreement.

ARTICLE 17Owner's Right ofAssignment

17.01 Owner's Assignment. Notwithstanding any of the language herein contained tothe contrary, Owner reserves the right to freely assign, mortgage or encumber this Agreementwithout seeking prior or subsequent consent of Manager. Any assignment of this Agreement orsale of the Premises shall be subject to Manager's interests in the Premises, as described herein,and the terms, condition, covenants and agreements of this Agreement. If Owner shall sell thePremises or assign this Agreement or if the Premises shall be sold at foreclosure or trustees sale,Manager and all holding under Manager shall attorn to the assignee, purchaser or to Owner'ssuccessor in interest as if the assignee, purchaser or successor in interest were Owner.

ARTICLE 18Purchase Option

18.01 Option Right. At any time prior to the expiration of the Initial Term or the Re-newal Term, provided this Agreement is not in default, Manager shall have the exclusive optionto purchase the Premises.

18.02 Notice of Exercise. Manager shall provide Owner written notice of its intent topurchase the Premises. The closing for Manager's purchase of the Premises ("Closing") shalloccur no sooner than forty-five (45) days and no later than One Hundred Fifty (150) days fromthe date of the said notice.

18.03 Purchase Price. The purchase price for the Premises ("Purchase Price") shall beSeven Million Dollars ($7,000,000.00), paid in U.S. Dollars by wire transfer at Closing.18.04 Contingencies. Closing shall not be subject to any contingencies, except those

expressly set forth in this Article.18.05 Lender Fees. In the event Manager procures financing in order to purchase the

Premises, all lender and loan-related fees shall be paid by Manager.18.06 General & Special Taxes, Etc.. All general or special taxes, rents, ground rents,public, private or community water and/or sewer charges, including any deferred sewer andwater tap fees, homeowners association charges and all other public, private or governmental

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charges or assessments with regard to the Premises, excluding liens which must be paid prior todeed recordation, which may exist, whether such have been levied or not, will be prorated as ofthe date of Closing and assumed thereafter by Manager.

18.07 Deed & Title. Upon payment of the Purchase Price, a deed for the Premises con-taining covenants of special warranty and further assurances shall be executed at Owner'sexpense by Owner, which shall convey the Premises to Manager. As part of its due diligenceprior to the exercise of the purchase option provided for herein, Manager shall be responsible forconducting a search of the title to the Premises in order to ascertain whether it is good andmerchantable. Closing shall be contingent upon there being no defects in the title to thePremises arising subsequent to the date of the provision of Manager's notice to Owner of itsdesire to exercise its option to purchase the Premises.18.08 Commissions. The parties agree that no real estate commissions or brokerage orfinders fees shall be payable in connection with the consummation of the transactions to becompleted at Closing. In the event any such commissions or similar fees are payable, the party

contracting with the person or entity to whom they are payable shall be responsible for paymentof the same.18.09 Recordation & Transfer Taxes. The cost of all recordation tax and transfer taxesshall be paid by Manager.18.10 Closing Costs. With the exception of the cost of deed preparation, all costs ofClosing shall be borne by Manager. Notwithstanding the foregoing, each party shall pay theirown attorney's fees.18.11 Post Closing Assessment. It is understood and agreed that Owner has no control

over or authority regarding the tax assessment for the Premises. Nevertheless, should Managerapply for a reduction in the assessed value subsequent to the date of Closing, Owner willcooperate in that effort, it being understood that the obligation to do so shall survive Closing.ARTICLE 19Hazardous Materials

19.01 Owner's Obligations. A Phase 1 environmental survey of the Premises wasperformed in connection with an adaptive reuse study commissioned by Owner. Manager hasbeen provided with a copy of the said survey and agrees that its terms are satisfactory toManager. Ifthere is a change in the condition of hazardous materials which are on the Premises,Owner shall be obligated to take such remedial action as is necessary to restore the state of saidmaterial to the condition it was in prior to the said change or to as substantially a similarcondition as is feasible.19.02 Manager's Obligations. Manager covenants and agrees that during the term of thisAgreement, neither Manager nor any of Manager's agents, employees, contractors, invitees,assignees, sublessees, licensees or concessionaires shall cause any Hazardous Material to bebrought upon, kept, or used in, on, or about the Demised Premises or the Buildings or

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transported to or from the Demised Premises or Buildings without the prior written consent ofOwner, which Owner shall not unreasonably withhold so long as Manager demonstrates toOwner's satisfaction that such Hazardous Material: (1) is necessary or useful to Manager'sbusiness; (2) would be used, kept, stored, and disposed of in a manner that fully complies withall laws, rules, statutes, ordinances, orders, requirements, and policies (collectively "HazardousMaterial Requirements") of any governmental agency or authority or any fire insuranceunderwriters (collectively "Governmental Authorities") applicable to any such HazardousMaterial; (3) would not invalidate or limit the coverage or increase the premiums of anyinsurance policy affecting or covering the Demised Premises or the Building; (4) would notviolate any provisions of any loan documents for any loans made to Owner and secured by thePremises; and (5) would not pose a material risk to any persons or property or materiallyincrease the risk of a Hazardous Material Release. Manager covenants and agrees that to theextent Manager or any of Manager's agents, employees, contractors, invitees, assignees, orsublessees shall cause during this Agreement any Hazardous Material to be kept, used, or presentin, on, or about the Demised Premises or the Buildings, Manager shall ensure that suchHazardous Material is in full compliance with all Hazardous Material Requirements and theterms of this Agreement, and that no Hazardous Material Release occurs on, under, or about theDemised Premises or the Building. In addition to Manager's obligations set forth herein,Manager affirmatively represents and warrants unto Owner that existing "spills" from Manager'sprevious and future operations on the property are not now, nor will be, toxic, and that the"spills" are not "hazardous materials" or "regulated substances" as defmed under Federal orState law.

19.03 Indemnification. Manager shall indemnify, defend (with counsel satisfactory toOwner), and hold Owner, its directors, officers, officials, employees, agents, assigns, and anysuccessors to Owner's interest in the Premises, harmless from and against all loss, cost, damage,expense (including reasonable attorney's fees), claim, cause of action, judgment, penalty, fine, orliability, directly or indirectly, relating to or arising from the use, storage, release, discharge,handling, or presence of Hazardous Materials on, under, or about the Demised Premises or theBuilding in violation of Manager's obligations under this Agreement ("Hazardous MaterialsRelease"). This indemnification shall include without limitation: (a) personal injury claims, (b)the payment of liens, (c) diminution in the value of the Demised Premises, (d) damages for theloss or restriction on use of the Demised Premises or the Building, (e) sums paid in settlement ofclaims, (f) actual attorney's fees, consulting fees, and expert fees, (g) the cost of anyinvestigation of site conditions, and (h) the cost of any repair, cleanup, remedial, removal, orrestoration work or detoxification if required by any Governmental Authorities or deemednecessary in Owner's reasonable judgment. Owner shall have the right but not the obligation tojoin and participate in, and control, if it so elects, any legal proceedings or actions initiated inconnection with the Hazardous Materials Release. Owner may also negotiate, defend, approve,and appeal any action taken or issued by any applicable Governmental Authorities with regard toa Hazardous Materials Release. Any costs or expenses incurred by Owner for which Manager isresponsible under this Paragraph or for which Manager has indemnified Owner: (i) shall be paidto Owner on demand, during the term of this Agreement as Additional Rent; and (ii) from andafter the expiration or earlier termination of the Agreement shall be reimbursed by Manager ondemand. Manager's obligations pursuant to the foregoing indemnity shall survive the expirationor termination of this Agreement and shall bind Manager's successors and assignees and inure to

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the benefit of Owner's successors and assignees.19.04 Inspection. Notwithstanding any other right of entry granted to Owner under thisAgreement, Owner shall have the right to enter the Demised Premises andlor to have consultants

enter the Demised Premises throughout the term of this Agreement for the purpose ofdetermining whether the Demised Premises are in conformity with the Hazardous MaterialsRequirements.19.05 Notification of Owner. Manager shall immediately advise Owner in writing of,and if applicable provide OWner with a copy of: (a) any notices of violation or potential oralleged violation of any Hazardous Material Requirements that are received by Manager fromany Governmental Authorities; (b) any and all inquiries, investigations, enforcement, cleanup,removal, or other governmental or regulatory actions instituted or threatened relating toManager, the Demised Premises, or the Building; (c) all claims made or threatened by any thirdparty against Manager, the Demised Premises or the Building relating to any HazardousMaterials; and (d) any release of Hazardous Materials on or about the Demised Premises or the

Building that Manager knows of or reasonably believes may have occurred.19.06 Manager's Remediation. If any Hazardous Materials are released, discharged, orotherwise come to be located on or about the Demised Premises or the Building in violation ofthe provisions of Section 19.02 of this Agreement ("Hazardous Material Release"), Managershall promptly take all actions, at its sole expense and without abatement of Rent and AdditionalRent, as are necessary to return the affected portion of the Demised Premises or the Building andany other affected soil or groundwater to their condition existing prior to the Hazardous MaterialRelease. Owner shall have the right to approve all such remedial work, including, withoutlimitation: (i) the selection of any contractor or consultant Manager proposes to retain toinvestigate the nature or extent of such Hazardous Material Release or to perform any such

remedial work; (ii) any reports or disclosure statements to be submitted to any GovernmentalAuthorities prior to the submission of such materials; and (iii) any proposed remediation plan orany material revision thereto prior to submission to any Governmental Authorities.Notwithstanding the foregoing, Owner's prior consent shall not be necessary if a HazardousMaterial Release poses an immediate threat to the health, safety, or welfare of any persons and,despite Manager's best efforts, it is not possible to obtain Owner's consent before takingremedial action to abate such immediate threat; provided that: (a) Manager shall notify Owner assoon as possible and shall thereafter obtain Owner's consent as otherwise provided in thisParagraph; and (b) Manager shall take only such action as may be necessary or appropriate toabate such immediate threat and shall otherwise comply with the provisions of this Paragraph.In addition to any rights reserved by Owner under the terms of this Article, Owner shall have theright, but not the obligation, to participate with Manager and Manager's consultants andcontractors in any meetings with representatives of the Governmental Authorities, and Managershall provide Owner reasonable notice of any such meetings. All remedial work shall beperformed in compliance with all Hazardous Material Requirements. Owner's consent to anyremedial activities undertaken by Manager shall not be withheld so long as Owner determines, inits sole, good faith business judgment, that such activities will not cause any material adverselong-term or short-term effect on the Demised Premises, the Building or adjacent property.

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ARTICLE 20Certification Concerning Substance and Matter on Request of Mortgagee

20.01 Estoppel Certificate. Either party shall, without charge, at any time and from timeto time hereafter, within fifteen (IS) days after written request to the other, certify by a writteninstrument duly executed and acknowledged to any mortgagee or proposed mortgagee: (A) as towhether this Agreement has been supplemented or amended, and if so, the substance and matterof such supplementation or amendment; (B) as to the validity in force and effect of thisAgreement, in accordance with its tenure as then constituted; (C) as to the existence of anydefault hereunder; (D) as to the existence of any offsets, counterclaims, and defenses hereto onthe part of such other party; (E) as to the commencement and expiration dates of the term of thisAgreement; and (F) as to any other matters as may be reasonably so requested.

ARTICLE 21Owner's Right to Inspect21.01 Inspection. Owner shall have access to the Demised Premises and each partthereof that is not occupied by subtenants/tenants at all times for the purpose of inspecting thesame and making repairs, and for a period of six (6) months prior to expiration of the term of thisAgreement, to show the Demised Premises to prospective tenants or purchasers. It shall havethose same rights as to the portions of the Premises occupied by subtenants/tenants during thesubtenants' /tenants' regular business hours for the purpose of inspecting the same and makingrepairs, and for a period of six (6) months prior to expiration of the term of this Agreement, toshow the property and Demised Premises to prospective tenants or purchasers. Notwithstanding

the foregoing, Owner shall have the right to enter upon any portion of the Premises at any timein order to make repairs that are necessary to prevent imminent damage to the Premises.21.02 Signs at End of Term. Owner shall be entitled to place "For Rent" or "For Sale"signs on the Demised Premises during the last six (6) months of the term.

ARTICLE 22Subordination and Attornment

22.01 Subordination of Agreement. This Agreement, and any and all renewals,extensions and modifications thereof and amendments thereto, as well as any and all rights,privileges, benefits and options of Manager under this Agreement or otherwise existing withrespect to the Demised Premises and the real property of which the Demised Premises are a part,are hereby made subject and subordinate to the lien of any deed of trust, mortgage, or any otherlien or security document granted by Owner in order to secure a loan made to Owner ("DOT") atany time affecting (whether now or hereafter) the Demised Premises or the real property ofwhich the Demised Premises are a part, and to all renewals, modifications, consolidations,replacements, increases and extensions to any such DOT. This paragraph shall be self-operative,and no other instrument or document shall be necessary to effectuate the subordination of this

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Agreement to any DOT, and all financial institutions, other lenders, and title companies arehereby authorized by Owner and Manager to rely on this Section.22.02 Manager's Agreement to Attorn. Manager agrees that if the interests of Owner in

any of the Demised Premises shall be transferred to and owned by a mortgagee or a foreclosurepurchaser, Manager shall be bound to such mortgagee or foreclosure purchaser under all of theterms, covenants and conditions of this Agreement for the balance of the term thereof remainingand any extension or renewals or substitutions thereof which may be affected inaccordance withany option therefor in this Agreement, with the same force and effect as if such mortgagee orforeclosure purchaser were Owner under this Agreement, and Manager does hereby agree toattorn to any such mortgagee or foreclosure purchaser as its lessor or as owner of the Premises,as the case may be, said attornment to be effective and self-operative without the execution ofany further instruments on the part of any of the parties hereto immediately upon any suchmortgagee or foreclosure purchaser succeeding to the interest of Owner in the DemisedPremises. The words "foreclosure purchaser" as used herein shall mean a transferee of Owner'sestate in any of the Demised Premises and/or any of the parcels of real property of which theDemised Premises are a part through a foreclosure proceeding or by voluntary deed, assignmentor other disposition or transfer inlieu of foreclosure.

ARTICLE 23Events of Default23.01 Events of Manager Default. Manager shall have breached this Agreement andshall be considered in default hereunder if (a) Manager files a petition in bankruptcy orinsolvency or for reorganization under any bankruptcy or insolvency law or act, or makes anassignment for the benefit of creditors; (b) involuntary proceedings are instituted againstManager under any bankruptcy or insolvency law or act and not dismissed within ninety (90)

days; (c) Manager fails to pay more than twice in any twelve month period, any Rent when due;(d) Manager doing or permitting to be done any act which may result in a lien being filed oreffected against the Demised Premises and the same is not remedied within sixty (60) days afterManager receives notice of the third parties' intent to file or effect such a lien or sixty (60) daysafter the lien is filed against it, whichever is first to occur; (e) Manager fails to remain in goodstanding with the State of Maryland and its failure to do so is not remedied within thirty (30)days of Owner's written demand to Manager that it rectify the matter; or (f) Manager fails toperform or comply with any of the covenants or conditions of this Agreement, including, but notlimited to, payment of Rent, and fails to cure the breach within fifteen (15) days after writtennotice.

ARTICLE 24Effect of Breach24.01 Manager's Breach. In the event of a breach of this Agreement as set forth inArticle 23, Owner shall have the option to do any or all of the following in addition to and not inlimitation to any other remedy permitted in law, equity or this Agreement:

A. With or without terminating this Agreement, Owner may demand that

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Manager surrender possession of the Premises to it, in which eventManager shall immediately surrender the Premises to Owner. If Managerfails to surrender the Premises, Owner may, without prejudice to any other

remedy which it may have, enter upon and take possession of thePremises, using force, if necessary, and expel or remove Manager and anyother person who may be occupying all or any part of the Premises,excluding subtenants/tenants with subleases/leases which have beenapproved by Owner. Owner shall not be liable for prosecution or anyclaim for damages as a result of such actions and Manager waives anyliability therefore and agrees to indemnify and hold Owner harmless withrespect to any such liabilities or claims asserted against Owner by thirdparties.

B. Without terminating this Agreement, Owner may enter upon the DemisedPremises (without being liable for prosecution or any claim for damagestherefor) and do whatever Manager is obligated to do under the terms ofthis Agreement. Manager agrees to reimburse Owner on demand for anylosses, costs and expenses which Owner may incur in effectingcompliance with Manager's obligations under this Agreement, which costsand expenses shall constitute Additional Rent. Manager further agrees thatOwner shall not be liable for any damages resulting to Manager fromeffecting compliance with Manager's obligations under this subsection,whether caused by the negligence of Owner or otherwise.

C. If any of Manager's property is left in the Premises once Manager isdispossessed therefrom, Owner may store Manager's property in a publicwarehouse or elsewhere at the cost, risk, and expense of Manager, withoutOwner's being deemed guilty of trespass or becoming liable for any lossor damage which may occur on Manager's property, unless due toOwner's gross negligence or willful misconduct and, upon thirty (30)days' written notice to Manager, which the parties agree is commerciallyreasonable, sell at public or private sale any or all of said property,whether exempt or not from sale under execution or attachment (suchproperty being deemed charged with a lien in favor of Owner for all sumsdue hereunder), subject to the rights of prior first secured lienholder, withthe proceeds of sale to be applied: first, to the costs and expenses ofretaking, removal, storage, preparing for sale, and sale of the property(including reasonable attorney's fees); and second, to the payment of anysum due hereunder to Owner (including Rent, additional charges, anddamages, both theretofore and thereafter accruing); and third, any surplusto Manager.

D. Owner may declare the purchase option set forth in Article 18 hereof nulland void, upon which declaration the terms and provisions of Article 18shall no longer be in force and effect, even if Manager subsequently

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cures its default.24.02 Election to Terminate Agreement. No re-entry or reletting of the Premises or any

filing or service of an unlawful detainer action or similar action shall be construed as an electionby Owner to terminate this Agreement unless a written notice of such intention is given byOwner to Manager. Notwithstanding any such reletting without termination, Owner may at anytime thereafter elect to terminate this Agreement and Manager's right to possession hereunder.Notwithstanding anything to the contrary herein, Owner shall have no obligation to relet thePremises.

24.03 Attorneys' Fees/Costs. If Manager shall, after any grace period herein provided,default in the performance of any part of this Agreement on its part to be performed by virtue ofthis Agreement, Owner may immediately or anytime thereafter, without notice, and in additionto any and all other remedies available to it under this Agreement or otherwise by law, performthe same for the account and at the expense of Manager, which sum shall be payable upondemand, as Additional Rent. Notwithstanding, Owner may perform such obligations ofManagerprior to the expiration of any grace period, in the event of exigent circumstances, in order topreserve life, limb, or property. It is understood and agreed by the parties hereto that the termsand provisions of this Section 24.03 shall survive the termination or expiration of thisAgreement.

24.04 Owner's Defense. If Owner shall, without fault on the part of Owner, be made aparty to any litigation against Manager, and if Manager shall fail to provide Owner with legalcounsel approved by Owner (such approval not to be unreasonably withheld or delayed),Manager shall pay, upon demand, all costs and reasonable attorneys' fees incurred or paid byOwner in connection with such litigation. It is understood and agreed by the parties hereto thatthe terms and provisions of this Section 24.04 shall survive the termination or expiration of thisAgreement.

ARTICLE 25Agreement Payments in Event of Expiration25.01 Continuation of Payments. It is understood that some of the subleases/leases thatwill be entered into will have terms that last beyond the term of this Agreement, assuming thisAgreement stays in force and effect through the Initial Term and the Renewal Term. Inthe event

of the expiration of this Agreement, the portion of the Minimum Rent for subleases/leases whichrepresents Manager's Costs, as determined in accordance with Section 3.04 of this Agreement,shall be paid to Manager if, as and when Rent is received by Owner. It is understood and agreedby the parties hereto that the terms and provisions of this Section 25.01 shall survive thetermination or expiration of this Agreement.

ARTICLE 26Notices26.01 Notices. All notices or demands of any kind which either party may be required ormay desire to serve on the other under the terms of this Agreement may be served on the other:

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(1) by hand delivery by leaving a copy of such demand or notice for the party at the party'saddress set forth by the signature blocks below, (2) by sending via nationally recognizedcommercial overnight courier a copy of such demand or notice to the party at the party's addressset forth by the signature blocks below, (3) by mailing, certified or registered U.S. mail, returnreceipt requested, first class postage prepaid, a copy of such demand or notice to the party at itsaddress set forth by its signature block below, or (4) by sending a copy of such demand or noticevia fax, with a confirmatory copy by first class mail, to the party's fax number and address, setforth by the signature blocks below. Any notice required or permitted to be given hereundershall be deemed to have been duly and timely given: (1) upon delivery, if hand delivered or sentby commercial overnight courier, or (2) upon sending, if faxed before 5:00 p.m. on such day, or(3) if given by certified or registered mail as aforesaid, then two days after such mailing. Allnotices provided for hereunder shall be directed to the following parties:

If to Owner, to:City AdministratorCity of Cumberland57 N. Liberty StreetCumberland, MD 21502Fax: (301) 759-6438

If to Manager, to:John Laughlin, PresidentRidgecrest Investments, Inc.550 Highland Street, Suite #303Frederick, MD 21701Fax: (301) 228-2617

ARTICLE 27Miscellaneous

27.01 Governing Law. This Agreement shall be construed under the laws of the State ofMaryland. The parties acknowledge that this Agreement had been drafted, negotiated, made,delivered and consummated in the State of Maryland. Manager and Owner hereby agree to besubject to the jurisdiction of and waive any objection to the venue of any action filed by oneagainst the other, in any court located in Allegany County, Maryland, and waive any claim thatsuch courts constitute inconvenient fora. Unless otherwise agreed, all litigation arising out of oras an incident to the terms or execution of this Agreement shall be instituted and prosecuted inthe District Court of Maryland for Allegany County or the Circuit Court for Allegany County,Maryland.

27.02 Successors and Assigns. This Agreement shall be binding upon and inure to thebenefit of Owner and Manager and their respective heirs, personal representatives,representatives, successors and assigns. The term "representatives" is intended to have a broadmeaning, and it includes, without limitation, every person, partnership, corporation or

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association succeeding to the interest or to any part of the interest in or to this Agreement ofeither Owner or Manager herein, whether such succession results from the act or a party ininterest, incurred by operation of law, or is the effect of operation of law together with the act ofsuch party. Further, each and every agreement and condition of this Agreement by Manager tobe performed shall be binding upon its assignees, subtenants, concessionaires and/or licensees ofManager. It is further covenanted and agreed that should Owner's interest in the DemisedPremises cease to exist for any reason during the term of the Agreement, then notwithstandingthe happening of such event at the election of Owner's successor herein, this Agreement shallnevertheless remain unimpaired and in full force and effect and Manager hereunder agrees toattorn to the then owner of the Demised Premises.

27.03 Waiver of Breach. No waiver of any breach or breaches of any provision of thisAgreement shall be construed to be a waiver of any preceding or succeeding breach of suchprovision or any other provision hereof.27.04 Entire Agreement and Limitation of Warranties. It is expressly agreed by

Manager, as a material consideration for the execution of this Agreement, that this Agreement isthe entire agreement of the parties and that there are and were no verbal representations,warranties, understandings, stipulations agreements, or promises pertaining to this Agreementnot incorporated in this Agreement. Manager expressly agrees that there are and shall be noimplied warranties of merchantability, fitness, habitability, or of any other kind and thatManager's acceptance of the Demised Premises shall be "as is." It is likewise agreed that thisAgreement may not be altered, waived, amended, or extended except by an instrument in writingsigned by both Owner and Manager. Not in limitation upon the foregoing, Owner agrees that tothe extent assignable, all warranties, if any shall exist, from contractors or suppliers with respectto the improvements to the Demised Premises hereunder are hereby partially assigned toManager to the extent necessary to avail Manager of the benefits thereof with respect to itsleasehold estate and property located at the Demised Premises.

27.05 Time of the Essence. Time is of the essence in the performance of all the covenants,conditions, and agreements contained in this Agreement.27.06 Captions/Headings. The captions and headings inserted in this Agreement are forconvenience only and in no way define, limit, or otherwise describe the scope or intent of thisAgreement, any provision hereof, or in any way affect the interpretation of this Agreement.27.07 Severance/Reformation Clause. If any clause or provision of this Agreement isillegal, invalid, or unenforceable under present or future laws effective during the term of thisAgreement, then and in that event, it is the intention of the parties hereto that the remainder ofthis Agreement shall not be affected thereby; and it is also the intention of the parties to thisAgreement that in lieu of each clause or provision of this Agreement that is illegal, invalid, orunenforceable there be added as a part of this Agreement a clause as similar in terms to suchillegal, invalid, or unenforceable clause or provision as may be possible and be legal, valid, and

enforceable.27.08 No Partnership/Joint Venture. Owner does not, in any way or for any purpose,

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become a partner of Manager in the conduct of its business, or otherwise. This Agreementdoes not constitute a joint venture or a joint enterprise as between Owner and Manager.27.09 Gender. Words of any gender used in this Agreement shall be held and construed to

include any other gender; and words in the singular number shall be held to include the plural,unless the context otherwise requires.27.10 Survival of Agreement Terms. Any duty, obligation, or debt and any right orremedy arising hereunder and not otherwise consummated and/or extinguished by the expressterms hereof at or as of the time of the termination or expiration of this Agreement shall survivesuch termination or expiration as continuing duties, obligations, and debts of the obligated partyto the other or continuing rights and remedies of the benefitted party against the other.27.11 Commercial Lease. In the event the Tax Law Contingencies are met and Ownerprovides Manager with written notice that they have been met, this Agreement shall be construedas a commercial lease.27.12 Procuring Party. All parties to this Agreement acknowledge that there is noprocuring party for this Agreement to whom a commission or other compensation is owned by

any party.27.13 Waiver of Trial by Jury. THE PARTIES HERETO HEREBY WAIVE TRIAL BYJURY IN ANY ACTION OR PROCEEDING TO WHICH OWNER AND/OR MANAGERMAY BE PARTIES, ARISING OUT OF OR IN ANY WAY PERTAINING TO THISAGREEMENT OR ANY PROVISION THEREOF. IT IS AGREED AND UNDERSTOODTHAT THIS WAIVER CONSTITUTES A WAIVER OF TRIAL BY JURY OF ALL CLAIMSAGAINST ALL PARTIES TO SUCH ACTIONS OR PROCEEDINGS, INCLUDING CLAIMS

AGAINST PARTIES WHO ARE NOT PARTIES TO THIS AGREEMENT. THIS WAIVER ISKNOWINGLY, WILLINGLY AND VOLUNTARILY MADE BY THE PARTIES HERETO,AND THE PARTIES HERETO HEREBY REPRESENT THAT NO REPRESENTATIONS OFFACT OR OPINION HAVE BEEN MADE BY ANY INDIVIDUAL TO INDUCE THISWAIVER OF TRIAL BY JURY OR TO IN ANY WAY MODIFY OR NULLIFY ITS EFFECT.27.14 Recordation. Manager shall not record this Agreement without the prior writtenconsent of Owner. However, upon the request of either party hereto, the other party shall join inthe execution of a memorandum or so-called "short form" of this Agreement for the purposes ofrecordation. All costs of recordation, transfer taxes and/or recordation taxes for recording theAgreement, memorandum or short form shall be paid by the party desiring to record the same.

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IN WITNESS WHEREOF, the parties have executed this Agreement on the day and yearfirst written above intending that it be an instrument under seal.WITNESS/ATTEST:

OWNER: MAYOR AND CITYCOUNCIL OF CUMBERLAND

Marjorie A. Eirich,City ClerkBy: ~(S=E=AL==)

Lee N. Fiedler, Mayor

MANAGER: RIDGECRESTINVESTMENTS, INC.

By: (SEAL)John R. Laughlin, President

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M&CC Order No. 24,739April 15, 2008

AGREEMENT

THIS AGREEMENT, made as of this 15th day of April, 2008, by and betweenthe MAYOR & CITY COUNCIL OF CUMBERLAND, MARYLAND, ("City") andWESTERN MARYLAND HEALTH SYSTEM, INC. ("WMHS"), WITNESSETH:

RECITALSA. City is the owner and Lessor. of certain land, buildings, fixtures andimprovements commonly known as Memorial Hospital located at 600 Memorial Avenue,Cumberland, Maryland (collectively hereafter referred to as the "Memorial Facilities")and WMHS is the Lessee of the Memorial Facilities under and by virtue Of the following:1. A Lease Agreement between City and Memorial Hospital and MedicalCenter of Cumberland, Inc., a subsidiary of WMHS (hereafter referred to

as "MHMC") dated May 14, 1982 and recorded in Deeds Liber 529, folio342 among the Land Records ofAllegany County;2. A n, Addendum to Lease Agreement between the s ame parties dated May

14,19S2;3. AnAddendum to Lease Agreement between the same parties dated May30,1995;and4. A Lease Amendment and Extensioll Agreement dated February 15,2000 between City and WMHS (iill of which arecollectively hereinafterreferred to as the "Lease").B. WMHSpropo!>es tobuild a new, replacement hospital (the "New Hospital")within the City of Cumberland at a locationon theWesterlysideofWi11owb~oo~Road,and City recognizes the substantial benefitsand advantages to City and its citizens fromtheconstruction of such aNew Hospital and the parties mutually desitetQ en~out~geandfacilitate, tile construction of such aNew Hospital.C. In order-to encourage and facilitatethe construction of'a New Hospital, theparties recognize that it is necessary to provide for the termination of the Lease, theremoval of the medicallhospital equipment andfixtures for-purposes of the New Hospital,and for other medical rand hospital uses determined by WMHS, and to establish

cooperative ..rrangements for the turnoverof the Memorial Facilities to City and for there-use of the Memorial Facilities.D. WMHS is willing upon the completion of the. New Hospital to facilitate andassist in the turnover and re-use of the Memorial Facilities, including quitclaim of itsinterest in certain furniture, fixtures and equipment, cooperation in turnover and

EXHIBIT 1


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transition and a commitment to lease a portion of the re-use facilities as hereinafter setforth.

E. In consideration of the matters described in the preceding Recitals, the partieshave agreed to restrict the use of the Memorial Facilities following the opening of theNew Hospital to preclude use for certain uses and activities that compete with servicesprovided by WMHS at the New Hospital and nearby facilities and the parties desire to setforth in this Agreement the terms, provisions and agreements between them with regardto the termination of the lease, the turnover ofthe Memorial.Facilities and the.removal offixtures and equipment, the future uses of the Memorial Facilities and matters relatedthereto.

NOW, THEREFORE in consideration of the premises and the mutual terms,provisions and covenants hereafter set forth, the parties hereto do herebymutually agreeas follows:1. Construction of New Hospital. WMHS will use its best efforts and availableresources to finance and build a new, combinedhospital providing generalhospitalandacute care services within the City of Cumberland at the proposed location on thewesterly side of Willowbrook Road within the municipal boundaries of the City ofCumberland.2. Rellloval of Hospital EguipmentIHospital Fixtures. WMHS may removeall medical and hospital equipment and other fixtures installed by MHMC or WlvIHSfrom the Memorial Facilities according to the following terms:(a) A list of the equipment and fixtures to be removed willbe providedto City within nine (9) months prior to the Termination.Date (as

hereinafter defined). The remaining fixtures and equipment will remain inplGlceatthe Memorial Faci l i t ies,(b) WMHSwi11 remove equipment and fixtures that ate designated forremoval at its expense and will repair any removal damage to a s . good acondition as existed. before removal of the same in those areas (identifiedby agreement with City) where removal damage adversely affects City'sadopted plan for renovation or re-us~ofthe particular area. Such removalw111be completed within a reasonable time and, completed, in any eventwithin three (3) months following the hereinafter-defined TerrtJ.inatioilDate.3. Termination of MemorialLease/Ouit Claim of FiXtures. WMHS will ceasehospital operations at the Memorial Facilities effective thirty (30) days following theopening of the New Hospital and the Lease.shall be deemed to be tennil1ated as of thatdate (herein referred to as the "Termination Date"). WMHS may continue to have accessto the Memorial Facilities for an additional sixty (60) days afterthe Termination Date forthe purpose of removing any additional furniture, fixtures or equipment, and for any other

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purposes reasonably necessary to assist in the turnover of the Memorial Facilities toCity, subject to the same obligation to repair any removal damage as set forth in Section2 above, Upon completion of the removal of furniture, fixtures and equipment asdescribed in the preceding sentence, WMHS will execute documents quit claiming all ofits right, title and interest in any remaining furniture, fixtures and equipment to City.The Memorial Facilities shall be deemed to be turned OVer to City on the 30th dayfollowing the opening of the New Hospital,

Prior to the termination of the Lease, WMHS will continue to maintain theMemorial premises and facilities in good and operable condition, and to turn over theMemorial Facilities in as good a condition as now exists, ordinary wear and tearexcepted. Nothing herein ",ill require WMHS to purchase new or replacement capitalequipmenthaving a useful life substantially beyond the Termination Date, except as maybe mutually negotiated between the parties.4. Review of Environmental Conditions. It is agreed that if reasonably

necessary as a result of City's review of the Memorial Facilities or therecommendat ionof any consultant for City provided to WMHS prior to the Termination Datea Phase Istudy of environmental conditions willbeperformed within ninety (90)


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inspect the Memorial Facilities and the equipment and fixturestherein and to plan and arrange the detailed preparations for theturnover ofthe same to City.6. Lease-Back Commitment! This Section shall apply if the initial transferee,lessee or developer of the Memorial Facilities determines, in its discretion, that portionsof the Memorial Facilities will be made available for sublease, acquisition or other meansof occupancy for any health care uses (which circumstances are hereafter referred to as"Available for Occupancy").In the event that some space is Available for Occupancy (as defined above),WMRS shall be obligated to rent or acquire at leastfifteen (15,000) thousand square feetof space in the Memorial Facilities. The terms of such acquisition orrental shall be:

(a) Price and terms not less favorable to occupant than those availableto other occupants of similar size in the Memorial Facility;(b) Utilities available in the Memorial Facilities tobemade availablefor the space;(c) If on a rental basis, a mini1 1 1 U 1 1 1 term of five . ( 5 . ) . years with theoption to renew for an-additional five (5) yearstend(d) Other reasonable and customary terms (the languageshaU benegotiated between and agreed upon between the parties).

The developer shall not unreasonably refuse to sublet or make available suchspace toWMHS on such terms of like termssubstantially similar to those offered to third parties,In the event the subleasing or making of space available toWMHS is reasonablyinconsistentwith the initial transferee, developer or lessee's plans for the MemorialFacilities, it shall have no obligation to sublease or makespaceavailable to WMHS.

In the event that the initial developer later has a proposed sale or long-term lease of all of the space within the Memorial Fadlities,WMHS will, upon nine (9)months prior notice, re-locate ormove from the Memorial Facilities as necessary to allowthe sale or lease of all of the space to proceed.7. Restrictive Covenant. A restrictive covenant is imposed restricting theMemorial Facilities from and after the Termination Date .such that they may not be used

or occupied as:AhosPltal of any kind including a day hospital) (except that a Veterans'Administration hospital or a clinic or facility providing health careservices to veterans would be permitted);

1 A 'day hospital' isthe offering of more than one of the restricted services listed above in the samebuilding or facility through one or more providers, but not involving overnight stay or care.

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A1J.yhealth care facility requiring a certificate of need? or similar statecertificate under Maryland law (excluding, however, a nursing home asdefined in Sec. 19-1401 of the Health General Article of the AnnotatedCode of Maryland); A radiology or imaging facility; A laboratory facility (other than blood drawing and other basic tests asare commonly done in a . physician's office); A1J.ambulatory surgery center or facility"; A1J.yOutpatient Treatment facility, including any facility that performscolonoscopies, endoscopies, arthrograms, dialysis or interventionalprocedures of any kind, or specialized nuclear, radiation, or chemotherapy

procedures; or ' Any Outpatient Diagnostic facility, including any facility that usesimaging, nuclear; or electromagnetic procedures for diagnosis of injury orillness.This restrictive covenant shall be binding and effective upon The MemorialFacilities and City, its grantees, Iessees.permitrees, SUccessorsand assigns for a period often (10) years follo\Vingtheopening of the NeWHospital. The languageof'this.restrictivecovenant shall be included asa restriction with the affirmative ,consent of each grantee,lessee or other permittee in any deeds" leases or other grants or conveyances of any rightof owner ship use or occupancy of any part of the Memcrial Facilities.In the event that any provision in this Section 7 is deemed to be unlawfulorunenforceable by' reason of court precedent, court decision or other authoritative legalpronouncement, then such provisions shallbe deemed m~dified to the extent necessary inorder that such provisions shall be legally enforceable, and any Court having jurisdiction

2 A certificate of need is currently requiredfor the followin~ facilities:A hospital. limit~d service hospital, in-patient rehabilitation facility, home health agency andhospice as defilled. inSecti()n 19.-114 of the.Health GeneralArticle;A related institution as defined in Section 19-301 of the Health General Article (eXcluding,however, anu~singh0ri1ellsdefine.c1 in Section 19-1401 of the Health General Article);Any freestanding medicatracilityas defined in Section 19~131 of the Health General.-\rticJe;andAny


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is authorized, requested and empowered to modify such provision to the extent thatrenders it enforceable.

8. Right of First Refusal. In the event City should determine that any Cityproperty that now adjoins the New Hospital site is no longer needed for public purposesand is. available for sale or long-

Documents

Ridgecrest Memorial Hospital Lease